Can’t rule out corporate action in India Cements: Sudip Bandyopadhyay

"While all eyes are on India Cements, we are also bullish on some of the smaller and midcap companies like Star Cement," says Sudip Bandyopadhyay, Group Chairman, Inditrade Capital.

What is the future of India Cements where Radhakishan Damani has increased his stake?
We have been positive on the overall cement industry for quite some time. The bullishness on cement is getting reflected in what is happening. Demand has been strong and we believe that price recovery also will start happening now. We are seeing this happening in the cement industry after a very long time.

We have been waiting for cement to perform and finally it has started rewarding the investors. We have been bullish on some of the frontline cement companies as well as the midcap cement companies. India Cement had a lot of challenges at one point of time. They have recovered from those challenges, particularly vis-a-vis huge accumulation of debt and unrelated investments.

In fact now the unrelated investments are probably valued higher. The IPL team at some point was valued more than India Cement. With India Cements price moving up, the valuations are almost the same now. But the fact remains that at some point of time, there will be some kind of corporate action in that particular company and maybe Mr Damani is positioning himself right there. Of course, cement as a sector does look good and so performance wise also India Cement should do well.

The other point I wanted to make on cement is that while the excitement in India Cement because of Mr Damani picking up a stake is understandable, the fact is there are other cement companies in central and eastern part of India, particularly some of the smaller and midcap companies like Star Cement which has got a major business in northeast and northern Bengal. That is a cement deficit state and the prices are moving up. So, some of these interesting picks can also be looked at while the current excitement is obviously on India Cement.